Alibaba, the Chinese e-commerce giant, and Amazon are about to start a battle in Southeast Asia, and Lazada Group, which was acquired by the Chinese firm for $1 billion (RMB4.45 billion) this year, will be right at the center of that battle. The largest e-commerce site in Southeast Asia is deploying a series of initiatives in expectation of Amazon’s entry in 2017, according to Bloomberg.

Alibaba
Image source: hinglish Notes – Flickr

Southeast Asia is the next battleground

Now the Chinese retail giant has established its dominance in China, and the U.S.-based e-commerce company has done the same in the U.S. Both are now looking to make their mark around the world. Amazon has made large strides in India. On the other hand, Alibaba and Alipay have made a play for the Indian market through investments in Paytm and Snapdeal. But they are all minority stakes and do not value much, notes Bloomberg.

Amazon has not yet voiced its intentions for Southeast Asia, but the industry is expecting it to be there by next year.  In November, TechCrunch reported that the U.S. firm is likely to bring its Amazon Fresh and Prime delivery service to Singapore in the first quarter.

Alibaba is expanding its delivery network within the region and beyond through its partners in Korea and China. It is working to make some strong acquisitions and investments to shore up its supply network. Also the Chinese retailer aims to delve deeper into online groceries next year. It is making all these efforts because Lazada’s home turf is shaping up to be the next battleground for Amazon Chief Jeff Bezos and Alibaba co-founder Jack Ma.

Southeast Asia a true test for Alibaba

When asked about an incursion by the world’s largest online retailer, Lazada Chief Executive Maximilian Bittner said it is a “jungle out there,” adding that it will be interesting to see “how they will differentiate themselves.”

The Asian region offers Alibaba a new market, 620 million potential customers, and a level playing field. The Chinese internet giant has moved first and staked its claim in a region where Amazon has not even shown interest (at least officially).  The Chinese e-commerce giant has acquired companies to reduce the learning curve and develop faster. So far, Alibaba has made it big because it was secure on its home turf. Now will be its biggest test, as it will now be competing in a neutral venue.

On Wednesday, Alibaba shares closed down 1.05% at $91.19. Year to date, the stock is up more than 12%, while in the last six months, it is up more than 17%.